Apex exporters body FIEO on Tuesday urged the government to extend the interest subvention scheme for five years to help increase credit flow in the sector in order to boost the country’s shipments, which registered a steepest decline in 13-month falling 9.3 per cent in August to USD 34.71 billion.

Earlier this month, the government extended the interest equalisation/subvention scheme, which provides interest benefits, on pre- and post-shipment rupee export credit for one more month till September 30.

“The scheme will end on September 30. We have requested for it to be extended for five years. If there is no interest equalization scheme, then we will lose some markets and some orders,” Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai told reporters here.

The scheme helps exporters from identified sectors and all MSME (micro, small and medium enterprise) manufacturer exporters to avail of rupee export credit at competitive rates at a time when the global economy is facing headwinds. Exporters get subsidies under the Interest Equalisation Scheme for pre- and post-shipment rupee export credit.

The scheme was started on April 1, 2015, and was initially valid for five years up to March 31, 2020. It has been continued thereafter, including a one-year extension during COVID-19, and with further extensions and fund allocations.

The scheme is fund-limited, and benefits to individual exporters are capped at Rs 10 crore per annum per IEC (Import Export Code).

FIEO President Ashwani Kumar said that over 50 per cent of the production in India is done by MSMEs, which are facing financing problems.

The organisation has earlier stated that the declining bank credit to exporters will hurt the sector.